Gold ticks higher as markets digest U.S midterm vote

Gold has posted small gains in the Wednesday session. In North American trade, the spot price for one ounce of gold is $1227.90, up 0.07% on the day. On the release front, there are no major indicators in the United States. On Thursday, the Federal Reserve will set the benchmark rate and release a rate statement. As well, the U.S. releases unemployment claims.

The U.S mid-term election is over, with a new political landscape in Congress. The Democrats regained control of the House of Representatives for the first time since 2010, but the Republicans increased their slim majority in the Senate. The results are a setback for President Trump, as the Democrats will be in a stronger position to derail Trump’s plans to boost fiscal stimulus and lower taxes. This could dampen enthusiasm for the U.S dollar, and investors have reacted on Wednesday by sending the greenback broadly lower against other currencies, although gold has failed to jump on the bandwagon. Investors will be shifting focus to the Federal Reserve, which releases its monthly rate statement on Thursday. The Fed is expected to maintain the benchmark rate at a range of between 2.0% and 2.25%.

Another key event this week which could affect gold prices is the Federal Reserve policy meeting on Thursday. The Fed is expected to maintain interest rate levels, with a 93% likelihood that the Fed will stay on the sidelines. However, the rate statement will be scrutinized, with investors looking for clues regarding future monetary policy, as well as the Fed’s view of the economy. If the Fed sounds optimistic about the economy, risk appetite could rise and send gold prices lower.

XAU/USD Fundamentals

Wednesday (November 7)

  • 10:30 US Crude Oil Inventories. Estimate 2.0M
  • 13:01 US 30-year Bond Auction
  • 15:00 US Consumer Credit. Estimate 15.7B

Thursday (November 8)

  • 8:30 US Unemployment Claims. Estimate 214K
  • 14:00 US FOMC Statement
  • 14:00 US Federal Funds Rate. Estimate <2.25%

*All release times are EST

*Key events are in bold

XAU/USD for Wednesday, November 7, 2018

XAU/USD November 7 at 11:15 DST

Open: 1227.13 High: 1236.41 Low: 1223.11 Close: 1226.89

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1170 1204 1220 1236 1261 1284

XAU/USD edged higher in the Asian session. The pair posted strong gains in European trade but has given up these gains in the North American session

  • 1220 is providing support
  • 1236 is the next resistance line
  • Current range: 1220 to 1236

Further levels in both directions:

  • Below: 1220, 1204, 1170 and 1146
  • Above: 1236, 1261 and 1284

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.